Screen shot 2014-04-10 at 18.23.01Lewis Baston is author of Reggie: The Life of Reginald Maudling and several books about British general elections. He is a consultant on politics, elections and constituencies.

I’m fond of Reginald Maudling, despite everything. There’s a weary tolerance about the later Reggie that almost makes up for his corrupt business dealings, and there is an appealingly idealistic side to the younger one. The three defeats of 1963-65 – two Tory leadership elections bookending a general election loss – mark the turning point between the two. Maudling has the misfortune of going down in history as a byword for irresponsible pre-election budgets, but I don’t think this indictment of Reggie is fair. As George Osborne unveiled his high-risk 2014 budget, few will have cast their minds back almost exactly 50 years ago this week to when Reggie presented his April 2014 budget. But despite taking place in a vanished world of economic planning and tripartite talks between government, TUC and CBI, the Maudling budgets still have some contemporary echoes.

Maudling became Chancellor after the ‘night of the long knives’ reshuffle in July 1962, with the economy in what passed for a recession[1] in the golden age: quarterly GDP growth was around 0.7 to one per cent and unemployment stood at a then-startling 500,000. Reggie took it slowly at the beginning, leading to taunts of ‘Stop Dawdling, Maudling!’ from the Daily Mail, but his mini-budget in November 1962 and his full budget of April 1963 both stimulated the economy. Confusing official statistics and the effects of the exceptionally harsh winter of 1962-63 clouded the picture of how the economy was doing, and encouraged an expansionary policy. So did the prevailing idea – borrowed from the success of indicative planning in France – that with the encouragement of investment and technological innovation, and fostering the belief in higher growth, the economy could be levered up to a higher long term rate of growth.

The 1963 budget is one of the more interesting in recent history. Maudling ended up resisting Harold Macmillan’s prods from Number 10 that he should go for a national plan and give away £400m (£7.3bn in 2014 money), and went with the Bank of England and Treasury advice to give away something around £250m. He also faced pressure, as late as the Budget Cabinet, to reduce the basic rate of income tax, but stuck to his policy of raising the tax-free allowance so that more people were taken out of income tax; if Osborne wants to fight the Lib Dems for it, he can claim Tory roots for the idea (although it means embracing Reggie, which nobody since Ken Clarke seems willing to do). Maudling wanted to do his budget speech without notes, but the Treasury civil servants told him firmly that he couldn’t. Budget day is traditionally the one Parliamentary occasion during which a Minister can drink in the House of Commons chamber; while his predecessor Selwyn Lloyd sipped whisky, Reggie did not tell the press what the clear liquid in his glass was. It could well have been one of the rare occasions when Maudling stuck to mineral water. He did have other populist baubles, from abolition of Schedule A taxation on owner-occupied houses to legalising home brew (though he had nothing to say about bingo).

A year later, and it was clear that the economy was roaring ahead. Reggie’s 1964 budget – contrary to the mythology – was mildly deflationary and entirely in line with the advice he was getting. It was also dull (to the extent that the live radio broadcast at one stage cut away with the words ‘we have run into another dead period and I am going to ask for some music’) and anti-populist in that it raised duty on beer. But it was only a gentle squeeze on the brakes. There was nothing irresponsible or crudely electoralist about Maudling’s budgets – in June 1964 he appeared to the psephologist David Butler ‘affable, relaxed… he seemed not particularly optimistic about the outcome of the election but not much to care’. He had argued with his colleagues to call the 1964 election early, which given the opinion polls meant handing over to Labour sooner rather than later.

Reggie nearly managed to win the October 1964 election for the Conservatives, despite the seeming impossibility of the task for most of the past three years. The Tories could boast a strong economic record and massive investment in public services when they faced the electorate in 1964. It is ironic that the Douglas-Home government was just as committed to the ‘white heat of technology’ as Harold Wilson, and 1962-64 is a prelude to the Heath government in its pro-European stance, its expansionary policy and its relentless modernisation (Maudling took papers on decimalisation and the Channel Tunnel to Cabinet, without really believing in either).

But there is little gratitude in politics. In the 1965 leadership election, Reggie was effectively blackballed by Lord Cromer, Governor of the Bank of England, who disliked his policies (the dislike was mutual – Maudling thought the City was all ‘marble and monopoly’) and briefed journalists and Tory MPs. But Reggie nearly pulled off the benign confidence trick of getting through the awkward transition (in huge balance of payments deficits) to the sunlit uplands of higher growth. His successor, Jim Callaghan, told me that Maudling “hoped to make a breakthrough with higher productivity based on increased investment… he genuinely believed it was worth a try, and I don’t accuse him of concealing anything in his 1963 budget”. But Reggie had also projected a big rise in government spending through to 1968, dependent on hitting the four per cent growth target which some in the Treasury doubted was possible. When Maudling handed Number 11 over to Callaghan, he gave the cheery benediction of “sorry old cock to leave it in this shape. I suggested to Alec this morning that perhaps we should put up the bank rate but he thought he ought to leave it all to you.” Callaghan, a gentleman, saved the story for his memoirs many years later.

So near and yet so far: Reggie nearly won the election in 1964, and (arguably) could have set Britain on a path to higher growth and public and private affluence had the incoming Wilson Government not sown alarm during the election campaign and then lost its nerve afterwards. Exaggerating the evil legacy of a previous government is always politically tempting, but the damage it does to the ‘animal spirits’ of business confidence is immense.

Let us now put Maudling into context. Political and economic judgments are always entwined, and the decisions a Chancellor makes late in a Parliament are assessed on both their political and economic consequences. Simultaneous success on both counts is rare, and can probably only be claimed in recent history by Derick Heathcoat-Amory (1959), Geoffrey Howe (1983) and Gordon Brown (2001 – gentle reader, please continue rather than going straight below the line to argue this point). Whether George Osborne joins this exclusive club is up to the voters in 2015, and the next few years of economic history.

A slightly lower plinth in the Chancellors’ Hall of Fame belongs to those who produced Budgets that are acclaimed by economists, but which failed to impress the voters. The most prominent example of this was in 1970, when Roy Jenkins delivered a dazzling Budget speech on how well the economy was doing and scattered a few modest tax cuts. Most of the Labour Cabinet loved it, but Barbara Castle noted that her husband Ted was unhappy about it and “couldn’t see where the votes were in it”. Ted Castle was right, as the June 1970 election showed. Jenkins was subsequently criticised by his colleagues for playing it too straight and not being political enough, but the fault probably really belongs to Harold Wilson who rushed into an election before Labour’s polling recovery had bedded down. Ken Clarke in 1997 and Hugh Gaitskell in 1951 took prudent courses but divided their parties. The last Budget of Stafford Cripps (1949) was unnecessarily harsh – the Chancellor, in his rectitude, could not contemplate the idea of being thought to indulge in pre-election bribery, so he did not even give the appearance of doing so, even if he could have relaxed policy. Few Chancellors before or since would have been so scrupulous.

The Chancellors who get the politics right and the economics wrong see their historical reputations suffer. Rab Butler in 1955, Nigel Lawson in 1987 and Norman Lamont in 1992 are the most prominent examples, but I would argue that Jim Callaghan (1966) and possibly Denis Healey (1974 and 1978) have a foot in this camp; no doubt many of my readers would add Gordon Brown (2005) as well.

The ‘double whammy’ (to use a very apposite term) of a pre-election budget failing politically in the short term and also tarnishing its author’s economic reputation over the longer term is a rare combination. Anthony Barber never got the chance to introduce a proper pre-election budget because of the sudden onset of the February 1974 election, but can’t escape this category. In many ways, the situation is most frustrating for the Chancellors like Reggie Maudling and Alistair Darling who nearly made it – who had a shot at winning on both the politics and the economics and end up narrowly missing both and suffering for it out of all proportion.

Further reading

Lewis Baston Reggie: The Life of Reginald Maudling (Sutton, 2004
Edmund Dell The Chancellors (HarperCollins, 1996)
Reginald Maudling Memoirs (Sidgwick & Jackson, 1978)
Alistair Darling Back From the Brink (Atlantic, 2011)


[1] The official definition, now, of a recession is two successive quarters of GDP growth being negative, but this was invented in the 1960s as a piece of ‘spin’ so that Lyndon Johnson could deny that the US economy was in recession.